M/S Gadodia Brothes vs. Dpty Commi. Of Revenue Office Of The Charge Officer Commercial Taxex And SGST And Ors

Facts

The petitioner, M/S Gadodia Brothers, filed a writ petition challenging an order dated July 24, 2024, passed by the Deputy Commissioner of Revenue under Section 73(9) of the West Bengal Goods and Services Tax Act and the Central Goods and Services Tax Act. The petitioner contended that the show cause notice dated August 25, 2023, and subsequent proceedings were illegal as the notice was not uploaded on the normal portal but only under the 'Additional Notice and Orders' tab on the GST portal, preventing the petitioner from responding. The petitioner only became aware of the show cause notice after receiving a bank recovery notice. Subsequently, the revenue authorities initiated garnishee proceedings, issuing a recovery notice under Section 79(i)(c) of the WBGST Act to Federal Bank (respondent no.2), placing a lien of Rs. 7,98,155/- on the petitioner's bank account for CGST and WBGST dues, and also recovered Rs. 81,117/- from the electronic credit ledger on July 20, 2026.

Held

The Court held that since the petitioner had not received the show cause notice and consequently could not file a reply, an opportunity must be granted. The Court directed the petitioner to file a reply to the show cause notice within four weeks for the financial year 2020-2021. The respondent authority is to consider this reply within eight weeks, afford the petitioner an opportunity of hearing, and pass a reasoned order in accordance with law, communicating the decision within a week thereafter. The Court also directed the bank authorities to de-freeze the petitioner's bank accounts, which had been frozen due to the recovery notice, to enable the petitioner to continue business seamlessly. The issue of the legality of the original show cause notice and subsequent recovery, pending the filing of the reply and passing of a reasoned order, was not definitively decided but was to be addressed in the fresh proceedings.

Key Issues

1. Whether the impugned order dated July 24, 2024, passed by the respondent no.1 under Section 73(9) of the WBGST Act and CGST Act is legal and valid, considering the alleged non-compliance with the prescribed procedure for issuing the show cause notice dated August 25, 2023? (Question of law and fact, turning on Section 73 of the CGST Act and WBGST Act). Petitioner's contentions: The petitioner argued that the show cause notice was not uploaded on the normal portal but in a less accessible tab, thereby preventing them from responding. They only became aware of the notice through a bank recovery notice. The subsequent proceedings, including garnishee proceedings and recovery from the bank account and electronic credit ledger, were therefore contrary to law and passed without due compliance. Revenue's contentions: The judgment does not record specific arguments made by the revenue or state respondents regarding the validity of the notice or the procedure followed. However, their appearance and the subsequent actions indicate a stance that the recovery was justified.